In the 1990s, strong incentives for managed care organizations to control costs, once regarded as a fortuitous confluence of interests, came to be seen as antithetical to consumers' interests in quality of care. In response to this change in political climate, many states have greatly increased their regulatory control of managed care organizations since the mid-1990s. This activity is surprising in an era when public policy on health care issues is usually described as frozen, gridlocked, and/or stalemated as a result of intense activity on the part of organized interests. We take advantage of the variation in state regulations of health maintenance organizations (HMOs) to discover why some governments are able to address policy problems that are often perceived as intractable in a political if not in a true policy sense. From the history of HMOs, the backlash against managed care, and state responses to that backlash, we first extract a number of hypotheses about state regulatory activity. We then test these hypotheses with data on regulatory adoptions by states during the late 1990s and the early 2000s. Last, we discuss the findings with special attention to the role of politics in health care.

Monson, A. 2001. Testimony on behalf of the National Conference of State Legislatures (NCSL) before the U.S. House, Committee on Energy and Commerce, Subcommittee on Health, 107th Cong., 1st sess., March 15. www.ncsl.org/programs/press/2001/monson-pbor.htm.

Noble, A. A., and T. A. Brennan.

1999

. The Stages of Managed Care Regulation: Developing Better Rules.

Journal of Health Politics, Policy and Law

24

:

1275

-1306.

Oliver, T. R.

2004

. Policy Entrepreneurship in the Social Transformation of American Medicine: The Rise of Managed Care and Managed Competition.

Journal of Health Politics, Policy and Law

29

:

701

-7

Paul-Shaheen, P. A.

1998

. The States and Health Care Reform: The Road Traveled and Lessons Learned from Seven That Took the Lead.

Journal of Health Politics, Policy and Law

23

:

319

-361.

Peltzman, S.

1976

. Toward a More General Theory of Regulation.

Journal of Law and Economics

19

:

211

-240.

Pracht, E. E., and W. J. Moore.

2003

. Interest Groups and State Medicaid Drug Programs.

Journal of Health Politics, Policy and Law

28

:

9

-30.

Quadagno, J.

2005

.

One Nation Uninsured: Why the U.S. Has No National Health Insurance

. New York: Oxford University Press.

Robinson, J. C.

2001

. The End of Managed Care.

JAMA

285

:

2622

-2628.

____.

2003

. The Politics of Managed Competition: Public Abuse of the Private Interest.

Journal of Health Politics, Policy and Law

28

:

341

-353.

Ross, E. C.

1999

. Regulating Managed Care: Interest Group Competition for Control and Behavioral Health Care.

Monson, A. 2001. Testimony on behalf of the National Conference of State Legislatures (NCSL) before the U.S. House, Committee on Energy and Commerce, Subcommittee on Health, 107th Cong., 1st sess., March 15. www.ncsl.org/programs/press/2001/monson-pbor.htm.

Noble, A. A., and T. A. Brennan.

1999

. The Stages of Managed Care Regulation: Developing Better Rules.

Journal of Health Politics, Policy and Law

24

:

1275

-1306.

Oliver, T. R.

2004

. Policy Entrepreneurship in the Social Transformation of American Medicine: The Rise of Managed Care and Managed Competition.

Journal of Health Politics, Policy and Law

29

:

701

-7

Paul-Shaheen, P. A.

1998

. The States and Health Care Reform: The Road Traveled and Lessons Learned from Seven That Took the Lead.

Journal of Health Politics, Policy and Law

23

:

319

-361.

Peltzman, S.

1976

. Toward a More General Theory of Regulation.

Journal of Law and Economics

19

:

211

-240.

Pracht, E. E., and W. J. Moore.

2003

. Interest Groups and State Medicaid Drug Programs.

Journal of Health Politics, Policy and Law

28

:

9

-30.

Quadagno, J.

2005

.

One Nation Uninsured: Why the U.S. Has No National Health Insurance

. New York: Oxford University Press.

Robinson, J. C.

2001

. The End of Managed Care.

JAMA

285

:

2622

-2628.

____.

2003

. The Politics of Managed Competition: Public Abuse of the Private Interest.

Journal of Health Politics, Policy and Law

28

:

341

-353.

Ross, E. C.

1999

. Regulating Managed Care: Interest Group Competition for Control and Behavioral Health Care.